people whether they're at occupy wall street or whether it's an investor entrepreneur who's just like hey this isn't fair that the banks got bailed out there shouldn't be socialize risk then you know them then benefiting though from the profits but does bad refutation have any impact on the actual banks did certainly as a huge impact they could lose deposits they could lose business remember these are all international institutions who are asked to do and try to do business all over the world when you have a choice and you do because there are a lot of big banks the one with the worst reputation has a tendency to lose you see people move their money elsewhere you see people move their trading elsewhere you see companies use other folks for stock underwriting so where the rubber meets the road it cannot help your basic business to be seen in such low esteem and it will hit you across the board from your supplier relationships with other businesses to your relationships with intended or hoped customers and loss of relationship with existing customers and then now we know that the banks to in the us have a lot of risk ok we just come out and say basically we could cut all of investment

banking i spoke to some people that said yeah where his mood has been for the last several years this is not new news coming out today though the bank of america will consider selling its retail branch network in texas it's us trust you know if it was forced to raise capital i just said in my lead up a couple other banks said hey we're going to change accounting so we're not going to mark to market we're going to do it a different way where we don't have to realize the actual value are all of these sending up red flags to you about the risk in the banking system. absolutely what we know full well that there's a one or two notch downgrade quite likely coming for the ratings agencies on the big american financial institutions led by the full service banks that have investment banking and broker dealer operations as well as retail banking and least many of them we know that if your rating is caught you actually it costs more for you to borrow money and you have to post more cash as collateral against your activities one thing you can do therefore is change your accounting to make it look like you have more cash or sell some of your units to actually raise more cash and

lower your risk and i think we're seeing different banks play to different concerns that they might have whether that's bank of america or morgan stanley or the other big names and there's a generalized fear that the regulatory environment is going to be hard for banks going forward that they're not going to return to the profitability of two thousand and six two thousand and seven and that they may be downgrading downgraded in the not too distant future i mean they need to have more cash on hand they need to be even more careful and they need to play with the rules a little more to free up what cash is left and in some cases that takes the form of the mark to market provision in terms of their asset accounting and when you talk about playing with the rules one thing i thought was interesting with with the news about morgan stanley and goldman is that they're marking to market to get away from capital requirements that are going to come down by accounting that way if they do it the with the other accounting method they don't have to hold more capital is this an example of regulation backfiring and actually creating more risk or hiding

risk because banks just get around it. yeah i mean part of what you see here is if the regulators really push banks who haven't fully healed from the zero eight zero nine scenarios and the losses particular loss of confidence which you spoke to in the sort of confidence quotient there or the prestige factor that these banks are going to look to find ways to use the capital they have more aggressively to make more money and also to use the capital they have more loosely from an accounting perspective to appear more well off of lies than they might be under a different accounting standard because they're under public opinion pressure they're under regulator pressure and probably most importantly they're under profit pressure because the economic environment today is a shadow of its former self if we look at the first few years of the twenty first century so is there a ticking time bomb on wall street that we're maybe not going to see because of all the things you just talked about i'm not sure if we have a ticking time bomb on wall street but we definitely have a situation here where people are trying to get to fully factor that american

financial institutions are going to make less money they're going to be pushed to take less risk which means less profit they're going to have less employment they certainly have less clout and they probably going to have less political power than they've had for most of the last thirty years and that's a struggle and they'll push back against it but the tide looks fairly clear here and fighting the changing tide is generally speaking it's not a very successful undertaking some people might be carrying now before we go you mentioned other threats europe japan oil shocks that combined with what we're talking about with the u.s. banking sector which we know is huge what are we looking at economically for the rest of two thousand and twelve and is that what the s. and p. do and if it doesn't look good. yeah i mean s. and p. is also trying to kind of rebuild its own reputation that was shattered by its constant habit of closing the barn door after the horses got out so they want to be ahead as opposed to behind the way they were with the housing crisis the way they were with the financial crisis the way they were with the european sovereign debt crisis now they're trying to be proactive of course when they are proactive they do

tend to make the economy worse i think we're seeing asset markets which are notoriously bad at charting a middle course oscillate between a really pure form of fear and a fairly pure form of greed while i'm happy to see relatively better economic numbers coming in over the last few months and that is good news i would i would caution folks it looks like people got a little ahead of themselves what they think is happening here the united states is now forecasting relatively high economic growth at least in the private sector on high profits with no wage growth with a persistent over eight percent unemployment and with the other really big problem that we're apparently planning to do really well over the next few years through exports and nobody to mention that twenty percent of all our exports go to the european union which is in the worst recession it's been in in years and then another ten percent of our exports go to japan which is also in one of the lower growth periods it's been during its twenty year economic downturn so it's not exactly clear to me what areas of strength we plan to export ourselves into and we still have consumers burdened with

a housing crisis with stagnant wages now for five years and i think we've kind of overlooked some of the risks to feel good about the future which has a value but we're nearing the point where we've overdone that to a point that makes me at least as an economist somewhat nervous great point max really great to have you on the show to break this all down thanks for being on capital account your first time as max rodwell he is chief economist and senior analyst at green press capital. i think. it's right it's time for some viewer feedback and now we have a lot of free market capitalism discussions on this show and in response to one i thought that this was a great comment w. dead them brought it up a great point for discussion and debate said there will never be

a free market it's a utopian dream just like there will never be pure communism in which everyone is equal the rich and powerful always find a way to exploit the situation to their benefit the reality is that you are not even starting from a clean slate you believe that if the government disappear that existing power relations will magically come undone that is a really excellent point i'm going to bring that up to my next guest like a jeffrey tucker to ask about that and speaking of one viewer responded to that saying as tucker puts it we're living in a very distorted world right now or is the prophet leonard cohen saying almost two decades ago things are going to slide slide in all directions won't be nothing you can measure anymore now i got a song for you since you brought up singing from jeffrey tucker himself take a listen. think of. the it's funny good of an army like these make. those rotors whole.

go. oh money printing songs and on on this friday that was at a debate between jeffrey tucker and dean baker another one of our guests about the fed they were both on our show that week and we talked about the debate and so someone asked us where can we see the debate between tucker and baker now we were there we filmed it we played some sound bites but seeing as there's an appetite for more we're going to put together about fifteen minutes from the debate will put it on our you tube channel next week so look for it hopefully monday you can go to youtube dot com slash capital account if you don't know but you should know because you should be a subscriber because the best way to stay in the loop of capital account ok this comment made me want to address an issue that often comes up they said lauren was in a hurry to interrupt the guy when he started speaking positively about nuclear energy so this was an interview i did with the rockwell and people often think oh you cut someone off because of some nefarious reason we're really guys i just have to break down that i have a hard break that i have to go do i have to go to break or the end of the show or

the next segment there is literally nothing i can do yes sometimes it's awkward off and i wish i could just go on and blow through it but it's just not how it works either i cut him off or shannon pulls the plug and i don't think you want that now we had european member of parliament nigel for raj this week talking about the risk of revolution and political assassinations in greece with the debt crisis of course raj is known to be outspoken but what i liked was that our viewer stephen guilfoyle an economist and trader and one of our favorite tweeters tweeted back he said for raj says it but who hasn't thought it could happen like that and i think that's really interesting to just show how widespread these beliefs are even though maybe you know you only hear someone that's very outspoken say them on t v that is all we have time for but i also appreciate all of your nice remarks which i didn't get to read a couple that lucky for me we have your feedback again next week but just know that i appreciate all of them but for now that's all we have time for thanks so much for watching the show feel free to follow me at on twitter at lauren mr give us.

baggett youtube dot com slash capital account also come back on monday everybody like the boob indicator and we're going to have the inventor of the boob indicator on the show on monday the blogger that reform broker that for now from ever in your capital account thanks for watching and have a great weekend. wealthy british soil the sun. is no time to go to the money. market why not. come to. find out what's really happening to the global economy with mike stronger for a no holds barred look at the global financial headlines tune into cars

a report on our. news today violence is once again flared up. these are the images the world has been seeing from the streets of canada. giant corporations are old today.

how do we sit and watch sean and you're a big build the best we're just at high speed railroads and gleaming new airports bridging the gaps in american infrastructure china is making the golden state shine again by helping expand the port of los angeles and looks like even america's road to recovery was made in china. did you hear that it could get a lot quieter in the u.s. thanks to a proposed bill that would weaken the protection of informers we'll tell you who the whistleblower improvement is actually protecting. and it comes down to

politics wrong politics that is as the g.o.p. dark horse makes major strides in the presidential contest we'll show you why the media and republican field should take him seriously. it is friday february seventeenth five pm in washington d.c. i'm christine frees out here watching our t.v. . well the vice president of china cheesing ping is wrapping up his u.s. tour in los angeles right now getting ready to go to a bouncy ball game the mayor of los angeles antonio is taking him to see the lakers play but his visit there of course much more than just fun and games she has been talking some major business in california where leaders have asked him to invest in major infrastructure products there and it turns out this is not just happening on the west coast as artie's ramon glinda shows us to rebuild america and repair some

of the crumbling infrastructure here there's a good chance we might have to call on china to help. los angeles has rolled out the red carpet for the man who is likely the future leader of china but president xi jinping took a tour of the china shipping terminal where the company just completed a forty seven million dollar expansion at the port of los angeles more than one hundred twenty billion dollars of chinese goods pass through here just last year but trade isn't the only item on the agenda l.a. mayor antonio via rego's is also hoping that the chinese and best in the city's infrastructure including public transportation and ports we used to be number one in infrastructure spending and the quality of or our infrastructure and now we're down to number thirty two behind barbadoes behind spain behind lots of different countries. really our infrastructure has been crumbling chinese investment may even

help ease some of this l.a. traffic the mayor's certainly hopes that it helps to bring jobs to the city as we see federal dollars become more scarce for projects such as road improvement and bridge construction it's increasingly likely there will be some time to and other foreign investors fixing our infrastructure how do we sit back and watch china and you're a big build the best bridges and high speed rail roads and going nowhere ports the white house has said that infrastructure improvements are a top priority but the u.s. lags behind europe and china when it comes to infrastructure investment yet ministration has said that chinese firms will play a role in financing infrastructure throughout the u.s. i don't think it's an ideal situation and i would prefer that the money. go to american corporations but the jobs will go to americans on that sounds terrible boost the economy while some welcome the foreign investors some people in los angeles we spoke to aren't so sure we should be so eager for chinese money i think

president reagan is probably rolling over in his grave somewhere. i know it's it's uncomfortable a lot of people figure. is the you know. bill you know so what is bad it will create more jobs i mean potentially but. this country is in so much that so it's about a. chinese firms are already working on a huge bridge projects in california new york and alaska political leaders defended the contracts claiming chinese companies would be more efficient but there has been criticism over china's work conditions and the devaluation of their currency we can't compete with that not because they are better engineers or because we don't know how to manufacture but because it's not a level playing field we need to get a level playing field here in the u.s. some blame excessive environmental regulations and political bickering in d.c. for our inability to invest more in infrastructure.

and investment many see as a key to economic recovery i think in the us competitive and what it seems the chinese are willing to make in los angeles in the r t it is a complex relationship between the two countries on one hand politicians trying to score points blame china for taking our jobs unfair trade practices keeping their currency values too low against the dollar but on the other hand china has saved this country economically time and time again and as one of our best trading partners this visit by the vice president is more than symbolic this is the reality of our time that the u.s. and china will be close friends or at least business partners for generations to come now to talk more about this joe weisenthal the deputy editor of business insider joins me from our new york studio hey there joe what's going on here again

good why why do you think american companies are not able to invest in their own infrastructure why do they need china's help. well i think there's a kind of a complex issue there are a lot of different sort of things to untangle here i mean first of august there is this idea that there are chinese companies that for various reasons can manufacture pieces of infrastructure faster than american companies there's not really that surprising the center in china is out manufacturing the u.s. in a lot of areas so for a city or a state that's looking for the cheapest source of building something i guess is not surprising that there are often situations where china is more competitive where it's weirder and kind of hard to figure out is this idea that we need china to help invest in domestic infrastructure people or just say that the u.s. is broke but it's really not the case and there would really be nothing except for politics stopping d.c. from investing a lot more in infrastructure in california and other parts of the country so the

idea of going with our cap in hand china to invest in infrastructure in california is really bizarre and i think really expect is an indication mainly of d.c. dysfunction rather than some economic necessity and we should mention you know considering some of these projects in california a lot of you know the workers will in fact be american workers but when you think about what going into some of these projects the people at the top the planners a lot of them the bigger people on these projects will be from china so it's pretty interesting let's talk about something else that's going on to not just in california. here's something interesting at least that i found it appears china which is the largest outside lender to the u.s. has reduced holdings of u.s. treasuries by about thirty billion dollars they say they instead want to devote more money to assist europe in addressing the debt crisis i don't really ever quote michele bachmann but you know she posed the question you know is china our sugar

daddy and maybe the question is is china now everyone sugar daddy. i mean first of all i would actually urge people not to read much into trying to reduce a good holdings of u.s. treasuries by thirty billion that's basically nothing and that and those things are going to have percent yet and and also they've if you look over the past years it kind of undulates in a year or so for example last spring it went down for a while then to pick back up so. so you about it in terms of all of the giving up of the u.s. so they're not going to lend to the u.s. anymore they're going to lend to europe is probably not the big problem and i actually think it's actually kind of scandalous the idea of europe begging china for help again but for kind of the same reason europe has its own currency you could print money it has plenty of wealth in germany and so on china for all the hype it gets about how big it is remains

a pretty poor country on the per capita basis the average chinese citizen is way poorer than the average european citizen so i actually think it's kind of an outrage that china is being asked to bear the burden for europe when europe's problems are mostly political structural and not really about a lack of money per se so i don't think china should be thought of so much as a sugar daddy and that they're so rich and everyone has to beg for them i think the fact that countries are begging for them for help is really both in the u.s. and in europe a sign of their own dysfunction inability to get their own act together not really about a lack of money i think that's an interesting point and certainly one of the reasons for the credit downgrade earlier in the year it just seemed that business in washington it was so dysfunctional it couldn't be done what do you see moving forward with the with these this relationship with china certainly the vice president who's in l.a. right now was in iowa yesterday and in washington

a few days ago. definitely slated to be the next president of china seen as a little different from the current president hu jintao so talk a little bit about does anything change or does this relationship start to stay status quo. well it probably will stay status quo. that i don't think there's going to be some radical change in the relationship over annoyed or but the thing is things are changing already in the trend is clearly up in terms of the u.s. selling more of the chinese over all the time. the chinese currency for all the talk people have about how weak it is continues to strengthen basically on a daily basis the chinese currency goes up a little bit. so i don't think we're going to see some radical changes you know overnight where suddenly you know they massively hike their currency or whatnot but change is happening and the chinese consumers are growing wealthier and that will

be good for a lot of american companies and there a lot of american companies are right now are making a fortune selling in china whether it yum brands in the success of k.f.c. or caterpillar and selling all of these earth moving equipment to china so let me tell you what it's like it is more two way that people give it credit for let me talk about quick about some of the rhetoric that's out there certainly coming from a lot of places including the white house let's hear from president obama quickly and then talk about it. you know. american workers you got folks like kathleen you're the most productive on earth. you can compete with anybody you want i don't work anybody as long as the level as long as the playing field is level you can compete with any worker anywhere anytime in china and europe does not matter if we are have a level playing field america will always win because we've got the best workers.

you know really optimistic there by the president america will always win because we have the best workers but why then do we see so many situations in which i mean for example that i phone story that came out a few weeks ago that that why america lost the i phone work because the workers are better and more efficient in china talk a little bit about i mean is this rhetoric versus reality or is it just two different situations yeah i mean go bomb is probably spinning a bit of the tail there i mean the fact of the matter is for a lot of manufacturing it clearly doesn't make sense to do it in the united states although big manufacturing in the u.s. people never talk about this it continues to grow the manufacturing employment as a percentage of total employment has gone down quite a bit over the last several decades but as an industry american manufacturing continues to be impressive and. expand and actually lately it's expanded much

faster than the economy as a whole. so it's complicated i'd say not a matter of our workers not being good our manufacturing sector not being competitive but there are clearly areas where just for matters of produce and environmental regulations and safety it's a lot cheaper to produce in china you know all right joe weisenthal deputy editor for the business insider in our new york studios. let's switch over to the race to the white house and the four republican candidates running to replace president obama it has been a fun filled week with talk about birth control and negative attack ads by super pacs and candidates dropping out of debates now you may remember last saturday was the republican caucuses in maine and mitt romney was said to be the winner with ron paul coming in second place well now the main republican party is going to recant his counties to recount vote totals and one county washington county which actually was closed last weekend due to the weather they'll hold their caucuses tomorrow so

there could be some new results but the bottom line is this system the process of choosing a presidential nominee is not working so well these days we already had iowa in which mitt romney was announced the winner turned out rick santorum won and now this so let's talk about the system and also about the view of one of the candidates ron paul with charlie mcgrath the founder of wide awake news dot com. hey there charlie let's just talk a little bit about this week and a lot of ron paul supporters certainly pretty upset about what happened in maine with announcements coming out prematurely you know the results of some of the primary results the caucus results being lost in spam mail boxes of the election head what's going on here. well you know it's hard to say what's going on i mean we knew going into it that that wouldn't be necessarily be able to be reported last week as being factual that it's going to take some time to for it to work out and

hopefully he ends up with the women in his column but i mean you know this is this is this is so completely the typical left right game you know the g.o.p. has its favorites mitt romney needed to win really bad so he would spend the day there and he was he was announced the winner i you know i think the good news is ron paul in two thousand and eight his performance wasn't even close to what we're seeing now in two thousand and twelve so you know even though even if you comes in second even if you just remains in the middle of this pack of four i think his support is growing because his message is legitimate and it's the best thing for this country and his message is certainly very different from sort of the standard line of the republican party a lot of you know kind of old school republicans are a little bit uncomfortable by the idea of ron paul not just by his message but the fact that he is unwilling to you know preach what they want him to preach i want to

put up something that was on c.n.n. the other day and they were really really interesting it shows you not just how the people think but look at this this is a poll that shows ron paul having the highest percentage fifty two percent he's on the bottom on romney is on top i mean maybe this just goes to show how the mainstream media views things but this is a picture actually taken from some of these television screen on c.n.n. what's going on here i mean why it's not just the republican party it seems it's also in this wasn't fox news this was c.n.n. it's also true some of the mainstream media that has a sum of all of all the mainstream media you know you want to treat them like your crazy uncle you know and you can you can you blame a lot of reasons for this i mean if you want to go to conspiratorial route. which is you know the route i'm going to take right here it's the eighty or ninety percent of the media the mainstream media is owned by a very very small group of corporations about half a dozen corporations control ninety percent of the news that is disseminated in

this country in the west and it benefits them to have this fake left right that'll between so-called the conservative republicans and liberal democrats because we know that there is absolutely no difference you talked about some of the topics that work of this week you know we're talking about abortion gay rights you know these things are important you know i'm not trying to belittle these things but the fact of the matter is we're still engaged in the longest military engagement in history this country we borrow forty cents of every single dollar to fund this military expansion and there's only one candidate in the perceived left or perceived right that is speaking against this and that's ron paul we have not declared a war in this nation since one thousand nine hundred two but for the last decade basically for the last two decades we have been on a constant war footing he's the only one with a message of we need to bring our troops home we need to have some money we need to get our own house in order and stop playing policeman around the world so that doesn't benefit the mainstream media you know in this small group but that's not not even top.